Question: Question 1: a) How is the decision to shut down different from the decision on how much to produce? Does the decision for shut-down differ

Question 1:

a) How is the decision to shut down different from the decision on how much to produce? Does the decision for shut-down differ depending on the market model? Explain and illustrate.

b) Estate two cases of market failure that occurred in China where the government had to intervene. For each case, specify what specific actions the Chinese government took and how do you assess the success of the interventions in terms of reducing the deadweight loss.

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